11. SEGMENTS

The Company’s reportable segments consist of the four types of commercial real estate properties for which the Company’s decision-makers internally evaluate operating performance and financial results: Residential Properties, Industrial and Office Properties, Retail Properties; and Self-Storage Properties (sold on April 10, 2015). The Company also has certain corporate level activities including accounting, finance, legal administration and management information systems which are not considered separate operating segments. The accounting policies of the reportable segments are the same as those described in Note 2. There is no inter segment activity.

The Company evaluates the performance of its segments based upon net operating income (“NOI”), which is a non-GAAP supplemental financial measure. The Company defines NOI for its segments as operating revenues (rental income, tenant reimbursements and other operating income) less property and related expenses (property operating expenses, real estate taxes, insurance, asset management fees, impairments and provision for bad debt). NOI excludes certain items that are not considered to be controllable in connection with the management of an asset such as non-property income and expenses, depreciation and amortization, real estate acquisition fees and expenses and corporate general and administrative expenses. The Company uses NOI to evaluate the operating performance of the Company’s real estate investments and to make decisions about resource allocations.

The following tables reconcile the Company’s segment activity to its results of operations and financial position as of and for the three and nine months ended September 30, 2016 and 2015.

	For the Three Months Ended September 30,						For the Nine Months Ended September 30,
	2016			2015			2016			2015
Office/Industrial Properties:
Rental income	$	6,135,845		$	4,715,807		$	19,166,498		$	13,075,111
Property and related expenses		(2,151,461	)		(1,679,926	)		(6,510,789	)		(4,885,154	)
Net operating income, as defined		3,984,384			3,035,881			12,655,709			8,189,957
Residential Properties:
Rental income		548,260			414,286			1,555,405			1,117,616
Property and related expenses		(25,061	)		(15,530	)		(94,142	)		(50,377	)
Net operating income, as defined		523,199			398,756			1,461,263			1,067,239
Retail Properties:
Rental income		1,100,623			981,509			3,277,619			2,952,646
Property and related expenses		(331,354	)		(206,998	)		(937,811	)		(876,694	)
Net operating income, as defined		769,269			774,511			2,339,808			2,075,952
Self-Storage Properties (discontinued operations):
Rental income		-			-			-			1,052,266
Property and related expenses		-			-			-			(1,183,641	)
Net operating income, as defined		-			-			-			(131,375	)
Reconciliation to net (loss) income:
Total net operating income, as defined, for reportable segments		5,276,852			4,209,148			16,456,780			11,201,773
General and administrative expenses		(1,340,197	)		(1,181,714	)		(3,947,627	)		(3,475,628	)
Depreciation and amortization		(2,564,211	)		(1,884,193	)		(7,723,372	)		(5,560,525	)
Interest expense		(3,323,740	)		(2,630,737	)		(10,187,983	)		(7,286,351	)
Interest income		9,892			26,220			78,224			61,976
Gain on sale of real estate		732,908			10,858			2,121,453			5,936,010
Impairment of real estate		(700,000	)		-			(700,000	)		-
Net (loss) income	$	(1,908,496	)	$	(1,450,418	)	$	(3,902,525	)	$	877,255

	September 30,		December 31,
Assets by Reportable Segment:	2016		2015

Office/Industrial Properties:
Land, buildings and improvements, net (1)	$	174,104,070	$	181,776,776
Total assets (2)	$	179,906,501	$	187,198,961
Residential Properties:
Land, buildings and improvements, net (1)	$	28,245,137	$	13,914,168
Total assets (2)	$	28,562,498	$	14,395,904
Retail Properties:
Land, buildings and improvements, net (1)	$	33,653,616	$	35,395,235
Total assets (2)	$	34,573,877	$	36,747,069
Reconciliation to Total Assets:
Total assets for reportable segments	$	243,042,876	$	238,341,934
Other unallocated assets:
Cash and cash equivalents		4,703,000		6,626,423
Other assets, net		6,524,517		9,306,036
Total Assets	$	254,270,393	$	254,274,393

(1) Includes lease intangibles and the land purchase option related to property acquisitions.

(2) Includes land, buildings and improvements, current receivables, deferred rent receivables and deferred leasing costs and other related intangible assets, all shown on a net basis.

Capital Expenditures by Reportable Segment
	For the Nine Months Ended September 30,
	2016		2015
Office/Industrial Properties:
Acquisition of operating properties	$	-	$	33,958,263
Capital expenditures and tenant improvements		3,629,586		2,313,655

Residential Properties:
Acquisition of operating properties		15,774,855		5,720,000

Retail Properties:
Acquisition of retail properties		-		2,850,000
Capital expenditures and tenant improvements		84,040		41,333

Totals:
Acquisition of operating properties, net		15,774,855		42,528,263
Capital expenditures and tenant improvements		3,713,626		2,354,988
Total real estate investments	$	19,488,481	$	44,883,251